In October 2024, the Office for Auditing Institutions in the Federation of BiH published, among other findings, the reports “Monitoring the Implementation of Recommendations from the Financial Audit Report” for the public utility company JP “Komunalno Neum” d.o.o. Neum (2018) and JP “Vodokom” d.o.o. Kakanj (2019). The reports showed that JP “Komunalno Neum” d.o.o. Neum implemented only 7 of 23 audit recommendations over five years, while JP “Vodokom” d.o.o. Kakanj implemented just 8 of 20 recommendations over four years.
The low implementation rate of audit recommendations is particularly concerning, as these public companies had serious irregularities identified, which negatively affect both their operations and the use of public funds. Specifically, JP “Vodokom” d.o.o. Kakanj and JP “Komunalno Neum” d.o.o. Neum received an adverse opinion for their financial statements and a qualified opinion for compliance with legal regulations from the Audit Office.
For JP “Komunalno Neum,” auditors established back in 2018, among other things: that water fee obligations amounting to BAM 433,299 were not settled in accordance with the Law on Communal Activities, nor reconciled with the Municipality of Neum; that obligations for water protection fees totaling BAM 105,969 were not settled in accordance with the Law on Waters and related by-laws; that the annual inventory of assets was not conducted in line with the Law on Accounting and Auditing in FBiH, along with other financial and non-financial irregularities that remain unresolved. Moreover, upon receiving the audit report, the company failed to comply with the Law on Auditing Institutions in FBiH by not informing the Audit Office about the actions taken to address the identified irregularities, which already at that time demonstrated a lack of willingness by management to correct the deficiencies.
For JP “Vodokom” Kakanj in 2019, it was established that: procurement procedures were not fully carried out in line with the Law on Public Procurement (e.g., construction materials, tools, and machinery worth BAM 240,000; spare parts for trucks, construction machinery, and vehicles worth BAM 135,000); the company lacked complete documentation on the ownership of buildings worth BAM 6,442,131; and other issues. Four years ago, appropriate audit recommendations were provided to eliminate these irregularities, but they have still not been implemented.
Such an attitude of public company management towards audit reports and the elimination of irregularities puts into question the efficiency of managing the resources entrusted to them. Considering that these companies are responsible for managing some of the most important resources in Bosnia and Herzegovina—resources essential for citizens’ living and working conditions—the Centers for Civic Initiatives (CCI) call on the mayors of Neum and Kakanj, as well as councilors of the Neum and Kakanj municipal councils, to urgently review the accountability of the management boards and supervisory boards of JP “Komunalno Neum” d.o.o. Neum and JP “Vodokom” d.o.o. Kakanj for failing to implement the recommendations over the past years, and to actively engage in eliminating all identified irregularities in these companies, in order to ensure more efficient operations and management of public funds in line with the law.